Art Pulaski: Don't let big chains push costs onto taxpayers

When it comes to health care costs, everyone must do their part to ensure our system is successful. But under the current system, a small number of huge, profitable corporations have found a loophole that allows them to shift their costs onto the rest of us.

Under the new Affordable Care Act, the costs of health care are shared between individuals, employers and government. Individuals must purchase health insurance. The government provides subsidies to help individuals and businesses afford coverage. Employers are required to provide affordable coverage or pay a penalty to offset some of the cost of public subsidies for their employees.

However, some of the state's biggest corporations have found a loophole that allows them to shift their costs onto taxpayers. These large, profitable employers are choosing to cut the hours and wages of their already-underpaid workers so those workers qualify for the taxpayer-funded Medi-Cal program. That way, they avoid the penalty for not offering affordable coverage to workers, and taxpayers pick up the tab, instead.

This loophole provides a perverse incentive for large, profitable companies like Walmart and Darden Restaurants (owners of Olive Garden and Red Lobster) to reduce workers' hours and cut wages to get out of paying their fair share of health care costs. For huge companies like Walmart, the loophole is a win-win. For workers, taxpayers and small businesses, it's a huge problem.

According to the UC Berkeley Center for Labor Research and Education, 250,000 workers for large companies are on taxpayer-funded Medi-Cal. If this loophole is not closed, that number will balloon to nearly 400,000 by 2019. That means taxpayers will be forced to foot the bill for another 150,000 workers over the next five years as a result of companies like Walmart trying to game the system.

AB880, by Assemblyman Jimmy Gomez, D-Los Angeles, seeks to eliminate this loophole and level the playing field by fining large private employers who shift workers onto taxpayer-backed Medi-Cal. The penalty would only apply to the state's largest companies that have 500 or more employees. Small and midsize businesses are exempt.

Proceeds from the penalty will go into a special fund that can only be used for Medi-Cal, easing the burden on taxpayers and increasing access to quality health care for millions of low-income Californians.

In a recent Register column, Bill Dombrowski of the California Retailers' Association – the lobbying arm of Walmart and other large retailers – claimed AB880 would overburden businesses. But the reality is that because the bill exempts small and midsize businesses, it only applies to big corporations that pay poverty wages and offer few, if any benefits.

Walmart made $444 billion in revenue in 2012. The company's CEO raked in nearly $28 million last year. Paying its fair share won't bankrupt Walmart. But allowing big companies to avoid their responsibilities burdens taxpayers and threatens not only our health care system but other priorities like education, infrastructure and job-creation programs.

Nearly half of all workers on Medi-Cal who are employed by large corporations are in the retail and restaurant industries. The threats that Walmart and other big-box stores and restaurant chains will pull up stakes and move out of state are ludicrous. Their customers are here.

The bottom line is that everyone needs to pay their fair share. Taxpayers, small businesses and many large companies, like Costco, are doing their part. It's time we stopped allowing a few bad actors like Walmart the opportunity to exploit a loophole that should be closed.

By enacting AB880, California will lead the nation in making sure that these profitable companies can't pass off more costs to taxpayers than they already do. This legislation would protect workers, taxpayers and small businesses by dissuading mega corporations from skirting the rules. That's commonsense policy the California Legislature should embrace.

Art Pulaski is executive secretary-treasurer of the California Labor Federation.

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